forgive my ignorance, but what is an "interest-only" loan?
where for the longest time you are only paying interest on the loan, no principle
As was stated below a loan where you only pay the interest for a long time, eventually though the principle comes due. A variation on the old Baloon mortage.
Shockingly according to Money magazine in 2005 these itnerest only loans accounted for about 1/3 of all new mortgages, with ARMs making up almost another 1/3 and another 5-10%(?) or so of subprime or noncomforming.
Correction the article said that regarding 2004.